The members of the Barron’s Roundtable see numerous bargains for savvy investors among healthcare stocks despite the seemingly endless and volatile coronavirus pandemic.
Rupal J. Bhansali, CIO and portfolio manager, International & Global Equities, Ariel Investments suggest 3 stocks:
GlaxoSmithKline (GSK) yields almost 5% “and offers single-digit organic earnings growth,” Bhansali told Barron's.
Gilead Sciences (GILD) has a 3.5% dividend yield The company also offers remdesivir, a drug that could be used to treat COVID-19.
Roche Holding (RHHBY) is a leading player in oncology.
“Glaxo, Gilead, and Roche are platform companies, as opposed to product companies. Their successor drugs come off the same mechanism of action and knowledge base as prior drugs. The risk of failure is lower, and the probability of approval is greater,” Bhansali says
Scott Black, founder and president, Delphi Management, likes Bristol-Myers Squibb (BMY). The company has a $134 billion market cap and pays a $1.80 annual dividend, for a yield of 3%. Eight of its drugs have more than $1 billion in yearly sales. The company aims to commercialize 20-plus new drugs in the next 10 years. That would add at least $20 billion in new revenue.
William Priest, executive chairman and co-CIO, Epoch Investment Partners, likes Thermo Fisher Scientific (TMO), which sells scientific instruments, lab equipment, diagnostics consumables, and life-sciences reagents. At $360 a share, the market cap is roughly $145 billion. He likes the company’s plan to acquire Qiagen (QGEN), a leading molecular-diagnostic-equipment and consumables provider, for $10 billion.
His also likes Abcam (ABC.UK), a small-cap company that trades in the U.K. It operates in the biologic-drugs industry, a fantastic end market that will have strong secular growth for years to come.
Meanwhile, a recent report from UBS predicts the “consumerization of healthcare” will continue to grow after the pandemic, and it could benefit both high-tech companies and stodgy retailers.
The bank defined defined the trend as “individuals asserting more influence and control over their medical & wellness care,” CNBC explained.
The trend is being driven by technological progress as well as an aging population and rising health care costs, according to the report.
UBS estimated he total addressable market for the industry at roughly $600 billion and still growing faster than the overall economy.
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